Stanford and Antigua regulator 'blood brothers' in fraud, claims CFO
Chief financial officer says Stanford sealed fraud conspiracy in 'brotherhood ceremony' with Antigua supervisor
HOUSTON, TX - Accused fraudster Allen Stanford's larger-than-life story has taken a turn for the surreal, with assertions he became 'blood brothers' with the chief Antiguan regulator, according to allegations made as part of a plea deal with Stanford's former chief financial officer, James Davis.
Davis's plea deal, filed on August 27, takes the Stanford trial from the sublime to the ridiculous, by accusing the Texan billionaire of making a "blood oath" with Leroy King, Antigua's chief banking supervisor, in 2003, to hide a $7 billion fraud at the Stanford Financial Group.
Davis has entered a guilty plea to fraud and conspiracy charges made by a Federal District Court in Houston, alleging Stanford ordered him to report false revenue and false investment portfolio statements to banking supervisors as far back as 1988, when Stanford ran an offshore bank on the Caribbean island of Montserrat.
"I did wrong. I'm sorry. I apologise. And I take responsibility for my actions," said Davis in a post-hearing statement.
Stanford, who was knighted by Antigua and Barbuda in 2006 as the leading employer within the Caribbean island economy, is alleged to have bribed King through payments to a Swiss bank account, as well as gifting him Super Bowl sports tickets.
In return, King - who Davis says referred to Stanford as "Big Brother" - is alleged to have colluded in a fraud conspiracy to hide a multibillion-dollar international Ponzi scheme from US and other regulators.
Reports first surfaced in February that US authorities, including the FBI, the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (Finra) and Florida state supervisors, were investigating Stanford's financial network for fraud.
Davis's plea alleges Stanford and he attempted to cover up evidence of fraud throughout the middle of 2008 by inflating the value of assets through a bogus Antiguan real estate deal that would convert a $65 million transaction into a fictitious $3.2 billion asset.
Stanford and Davis are accused of defrauding 30,000 investors out of $7 billion, filing false disclosures to investors and regulators, in addition to diverting more than $1.6 billion into undisclosed personal loans to Stanford, and conspiring to obstruct an SEC investigation.
The FBI served Stanford with an SEC civil compliant on February 19, but he was not arrested until June 18, after US authorities, still suffering media strife from the Madoff scandal, had been forced to admit they did not know Stanford's location.
Stanford, who has vociferously denied any wrong-doing in the case, was also due to appear in court on August 26, but a soaring pulse rate caused him to be hospitalised earlier that morning, with his lawyers subsequently saying he must either undergo angioplasty or have a heart catheter fitted.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies
Bank of Communications moves early to meet TLAC requirements
China Construction Bank becomes last China G-Sib to release TLAC plans
Most read
- Top 10 operational risks for 2024
- Top 10 op risks: third parties stoke cyber risk
- Japanese megabanks shun internal models as FRTB bites